FBI links contractor to senator

WASHINGTON -- FBI agents spent years investigating Sen. Ted Stevens. They read his e-mails, searched his home and taped his phone conversations with his friends.

This week, the Justice Department offered its first public glimpse at what it uncovered: a direct line of communication from a corrupt Alaska oil contractor to one of the nation's most powerful senators. When VECO Corp. executives needed help securing business, winning grants or navigating the bureaucracy, they called Stevens.

And when Stevens needed a new generator for his house, a car for his daughter or a job for his son, prosecutors say he called VECO, the same company that oversaw an extensive renovation project on his home.

The Justice Department didn't bring charges against Stevens for any of that, but they want jurors to see the evidence. Stevens goes on trial next month, not for bribery but for concealing the renovation project and other gifts on Senate financial disclosure forms.

Stevens, the longest-serving Republican senator, is in the midst of an unusually contentious re-election campaign. He says the Justice Department is using innuendo to accuse him of bribery without having to charge it.

Prosecutors argue that, with each transaction and conversation, they add to a mosaic revealing a senator working behind the scenes with friends and favored contractors and hiding his deals from Congress.

In court documents filed Thursday night, prosecutors laid out a series of things they want to discuss at trial, including the senator's help pushing oil-friendly legislation in Alaska and a 2001 condo deal in which Stevens allegedly parlayed a $5,000 investment into a $103,000 profit in a matter of months.

The oil legislation has become the cornerstone of the government's investigation. Two VECO executives, founder Bill Allen and vice president Rick Smith, have pleaded guilty to bribing sympathetic legislators with cash, jobs and gifts to push for a state oil tax deal and construction of a natural gas pipeline. Working with the FBI, the corrupt businessmen helped send several lawmakers and political figures to prison.

When the gas pipeline project stalled in the state legislature in 2006, Stevens allegedly offered to use his Washington connections to push it forward.

"I'm gonna try to see if I can get some bigwigs from back here to go up there and say, 'Look, uh, you just gotta make up your mind, you gotta get this done,"' Stevens told Allen in a phone call, according to court documents.

Days later, federal energy regulators issued a report saying that delays could cripple the project's future. Stevens also traveled to Alaska to help prod lawmakers into acting.

Stevens has denied any wrongdoing and hopes an unusually speedy trial will clear his name before Election Day. His supporters say he has backed Alaska development and championed pro-oil legislation for years, long before VECO came on the scene.

Prosecutors also plan to present evidence of an unusual Florida condo deal. They say Stevens bought the $360,000 condo in a complex that was being built. Rather than putting down a 10 percent deposit, prosecutors say he put down only $5,000 and his friend, a partner in the development company, kicked in the rest. Six months later, the development company allegedly bought back the condo for $515,000, giving Stevens a healthy profit even after he paid back his friend for the down payment.

Federal rules restrict how prosecutors can use evidence that don't result in criminal charges. Prosecutors say it bolsters their case that Stevens hid his financial deals on Senate forms, since he didn't disclose the money his friend gave him to buy the condo.

Prosecutors plan to play taped phone calls that they believe reveal a long-standing relationship of favors between Stevens and Allen. In one call, a lobbyist called Allen, apparently on Stevens' behalf, seeking a job for the senator's son.

"I'm not sure why he mentioned it to me, but he asked me to, I think, find out if you had any business contacts in Phoenix with respect to his son," the unidentified lobbyist said, according to court documents.

Allen came through and hired Stevens' son, prosecutors said. The company also hired his grandson at the senator's request, according to the Justice Department.

Finally, prosecutors say they want to present evidence that Stevens may have believed he violated the law. After learning that a friend had been subpoenaed to testify before a Washington grand jury investigating the senator last year, Stevens allegedly sent him two e-mails.

"I hope we can work something out to make sure you aren't led astray on this occasion," Stevens allegedly wrote in the first, following up shortly with, "don't answer questions you don't KNOW the answers to."